“You’re going to see a lot of bankruptcies,” said Michael Halen, Bloomberg Intelligence analyst, adding that smaller chains that managed to hang on because of cheap debt are the most at risk. “You’re going to see more chains go under.”
The looming bankruptcies are a major problem for landlords that have relied on restaurants as stable tenants as other parts of the retail landscape are decimated by e-commerce. In recent years, fast-food chains have taken up more and more space at malls and shopping centers as apparel companies and department stores struggle. But with coronavirus now shutting down both restaurants and retailers, landlords will likely have to choose between either cutting rents or losing tenants.
“Its definitely a concern,” said Vince Tibone, an analyst at Green Street Advisors. “The most likely outcome is landlords will have to concede on lower rent for a period of time.”